Every office, except a one-person sole proprietorship who does not sponsor other licensees, must have a company specific written office policy.

Why you ask?

• The written policy provides guidelines and standard procedures for both experienced and inexperienced agents.
• It can also protect the company and the DMB from potential liability when an agent “goes rogue.”
• It can be a good tool to provide process for resolving internal and external issues.

Do train new and existing agents on the most current office policies on a very regular basis.

Do make sure all licensees associated with the company know how and where to access the Office Policy Manual for guidance.

Don’t throw the policy in a physical or virtual drawer never to be found again, or until there is an audit or investigation happening.

This is generally a good practice, and while RELA requires a certain amount of oversight over all sponsored licensees it also contains some very specific requirements for oversight of newer broker licensees.

Consumer protection regulates the industry so even though brokers are treated as independent contractors, there is a level of oversight required by the DMB.

Do remember those broker licensees who have not completed their 45-hour post-license education must be under the direct supervision of their DMB.

Specific Requirements/Prohibitions for new broker licensees:

• Don’t allow new broker licensees to bind the company by signing contracts to which the company is a party. This includes brokerage agreements, like listing agreements with seller clients and buyer brokerage agreements with buyer clients.
• Don’t allow new broker licensees to handle earnest money or other escrow deposits and transmissions.
• Do assist new broker licensees with contract negotiations.

Here are some practical ways DMBs might handle these requirements:

• For earnest money/escrow handling. The office manager could have a specific process where money tendered is physically or electronically logged in to the company business office under the direct supervision of the DMB, because the DMB is included as a party in the written or electronic transmission of the deposit loop.
• For document signing, electronic options can be very helpful tools so the DMB can see all documents being processed in a transaction and ultimately, at least where new broker licensees are involved, the signing can be restricted to the DMB only. For other situations, the DMB could establish office policies and procedures related to who has or hasn’t got signing authority to bind the company.

Do consider mentoring programs for your office. Assign professionals you trust the most to help you to oversee others in the office who must have, or sometimes, just need, a little extra assistance.

In other words, be sure you have the “beer truck backup plan.”

• Professional DMBs should ask themselves how the company will continue should they or other key associates not be available for some unforeseen reason.
• No one ever knows when a company will be affected by death, illness or disability.
  • As part of the analysis, consider how the business is formed. If it is not already a separate legal entity like a corporation or limited liability company (LLC) consider why it might be beneficial to form a legal entity as opposed to operating as an unincorporated sole proprietor. A big advantage is that the business entity is perpetual so with appointment of new people the entity continues to operate. Sole proprietorships end when the owner’s life ends or when the owner elects to close shop. (This is an overly simplistic explanation, but it makes the point).

As previously stated, brokerages could experience an unexpected loss or even a departure of a sponsored licensee, so it is good for the DMB to have updated “snapshots” of the list.

Not only is it good for internal business controls, but also RELA requires the sponsoring company to keep the list of sponsored licensees current with the Illinois Department of Financial and Professional Regulation (IDFPR).

The sponsored licensees are likely required by the terms of their independent contractor agreements to notify the DMB before leaving, but notice is rarely given. Regular checks of the list will help the DMB track those sponsored licensees along with company assets.

• DMB and Illinois REALTORS®’ Business Issues Forum Chair, Brian Kwilosz recently shared that he does two things to accomplish this task:
  • He has an electronic spreadsheet of his company’s sponsored licensees in his office.
  • He regularly compares that list with the list on file with IDFPR. IDFPR will provide its official list at the DMB’s request.

Speaking of company assets, the brokerage agreements (listing contracts) are between the seller and the brokerage company. As a result, they are company assets and sponsored licensees are not free to take those when they leave unless this is specifically negotiated in the licensee’s independent contractor agreement.

• If the licensee induces the breakage of these agreements without the permission of the current sponsoring broker, there are potential RELA and Code of Ethics violations.